Six reasons why customer-centricity should NOT be an objective

15 years ago, you would have found no greater supporter of customer-centricity than me. The internet was bringing greater choice to customers, rebalancing power after their being squeezed in the latter decades of the 20th Century to deliver the short-term gains that the cult of shareholder value demanded. I would go so far as to pronounce that any business that didn’t change its philosophy to being customer-centric was doomed to a slow death.

But since then, customers’ satisfaction with the services they are receiving hasn’t improved while the corporate landscape in most sectors is pretty much unchanged. At its launch in 1994, the American Customer Services Satisfaction Index was measured at 74.8, it fell to its all-time low of 70.7 in 1997, recovered to 72.5 at the turn of the Millennium, peaking at 76.8 in 2013 and currently stands at 75.4 – a hair’s breadth difference to its inception score.

The shorter lived UKCSI shows a similar picture of a peak in 2013, followed by a fall and subsequent recovery. A case can be made that expectations have risen over that period, but a combination of these statistics and personal reflection would suggest that customers’ experiences have not been transformed. The deployment of new digital channels has simply created more silos rather than fundamentally simplified how customers interact.

For all that customer experience practitioners and the consulting community have enthused about the need for customer centricity, the overall effect has been minimal. "THAT’S BECAUSE VERY FEW ORGANISATIONS HAVE BECOME GENUINELY CUSTOMER-CENTRIC," I hear you shouting. But that is my point – we have been selling an impossible dream. Customer-centricity is too difficult for most large organisations that did not have it embedded from inception to attain. Secondly, it is not the only way to improve the customer experience and, I believe, not demonstrably the best way. In fact, it may actually be an impediment, for the following six reasons.

Customer-centricity is too vague a term to be useful

What does customer-centricity mean, specifically? How do you define it? How do you know when an organisation is genuinely customer-centric? I asked these questions to the head of CRM at a leading consultancy (a centricity enthusiast) and he replied that it meant ‘putting the customer at the heart of everything the business does.’ So I persevered, ‘What does that mean, specifically?’ And he couldn’t come up with an answer.

The more abstract a concept is, the easier it is to gain agreement on it. One of the first tricks of achieving conciliation between two arguing parties is to ‘chunk up’ – move from the specific to the abstract by asking ‘what is important about this?’ But when it comes to taking action, you need to chunk down – e.g. asking what would be an example of this – because action needs specificity.

The appeal of customer-centricity stems from its warmth and fuzzyness – it is the motherhood and apple pie of business jargon. It also means that people can interpret it however they wish. That has advantages if you are seeking to justify an initiative because it supports customer centricity. But it also means that 1,000 people can interpret it in 1,000 different ways. Such vagueness is never going to generate sustained action.

Customer-centricity is not measurable

On a similar theme, if you can’t measure it, you can’t deliver it. So how do you measure centricity? You can’t. When I have asked people this question, most give NPS as the answer. But NPS of CSAT measures customers’ perception of what they have received – not a measure of how customer centric the organisation is.

If reporting is to be useful, there needs to be some causal hypothesis that underpins it. Starting with what the business can control (internal process measures) through what impact that has on the customers’ perception (NPS, number of complaints, sentiment) to what action they take as a result (buy more or less from you, recommend to others). You can measure process outcomes, such as call waiting or first contact resolution. You can measure how variances in those measures impact customer satisfaction, NPS or number of complaints; and you can measure how differences in NPS impact both length and depth of the relationships that customers have with you. But I have yet to hear anyone come up with a measure for how effectively you put the customer at the heart of everything you do.

It’s a means, not an end (and one that could be counterproductive)

Improving the customer experience is an end; customer-centricity is a means. So even if you could measure centricity, that should be subsidiary to what you are trying to achieve. If you could improve the experience for customers by acting in a way that wasn’t customer-centric, would you do so? I think most businesses would. And if being more customer-centric (in the organisation’s view) actually harmed the customer experience? That is not as barmy as it may sound.

Let’s take the example of customer intimacy, a foundation stone of customer centricity, which involves seeking to understand customers and their needs so well that they can be served proactively with personalised offerings. That sounds great but how often do you, as a customer, really want that? Especially when you consider how attempts at proactivity are frequently just intrusive and excessive; while attempts to personalise are inaccurate and irrelevant.

Improving the customer experience is an end; customer-centricity is a means. So even if you could measure centricity, that should be subsidiary to what you are trying to achieve.

Another term for persisting with undesired and unreciprocated intimacy is stalking, and there are laws against it when people feel threatened. Junk mail, spam and online adverts that follow you wherever you go – all justified as personalisation –don’t create the same sense of oppression, but they are still annoying. Is that the plan?

The reality is that there are few (if any) businesses where I want to be at the heart of everything they do – it feels too oppressive when I just want a cup of coffee or a regular flow of electricity to my home – but brand-based thinking won’t allow that. Therein lies the rub, is customer-centricity really about serving customers in the way they want, or is it a justification for serving them in the way that the business would like to – with endless offers communicated via email, calls and online recommendation?

Many of the purists will say "of course not". But if we have learnt anything from behavioural economics, it should be that the value of any framework, approach or methodology is as much a function of how easily it is adapted and corrupted once it has been adopted – as will surely be the case – and how damaging that can be as how powerful it can be if perfectly implemented.

Staff-centricity versus customer-centricity

At a conference a couple of years ago, the key note speaker was from John Lewis – a partnership that has consistently been in the top 3 for customer satisfaction in the UK. He proudly announced that John Lewis wasn’t customer-centric – it was staff-centric. Richard Branson has preached the same philosophy throughout Virgin, where delivering a superior customer experience has been the mainstay for breaking into new markets.

The relationship between staff satisfaction and customer satisfaction was first noted nearly 20 years ago. And even in an age of increasing self-service it remains important because when you do want to speak to someone, it is pretty important and you want that person to be empathetic, helpful, experienced and energetic – none of which is likely to be the case if they are unhappy in their job.

So now we are looking at twin centricities – staff-centric to be customer-centric. But the reality is even more complicated than that.

Customer value requires all stakeholders to be looked after

Staff and customers are not the only stakeholders in a business – suppliers, partners and regulators all shape the experience that customers receive and their interests need to be considered by the CEO, along with those of shareholders.

I began to think customer-centricity might be a false god when I realised that the principles of customer strategy – the collection of insight to create a value proposition delivered by an operating model to achieve desired outcomes – could be applied to all stakeholder groups, that the game of business involved a value exchange between the organisation and each stakeholder group.

In thinking that through, the importance of each stakeholder group became very apparent. Of course, no business can exist without customers, but nor can any but the very smallest survive without staff or suppliers or perhaps partners. Customers may be primus inter pares – first among equals – but does that really amount to centricity? (And if you look up multi-centricity, the only use case for that term relates to cancerous tumours, so probably not a very helpful analogy.)

If you take the idea of customer-centricity to its extreme, giving customers everything they wanted for free, the business would disappear very quickly and customers would no longer get anything.

Enterprise value is a bit like the ceremony at the beginning of Champions League games where a round sheet decorated as a football and covering the centre circle is flapped up and down by a group of children. Now imagine that there were just six – to cover the major stakeholder groups – and instead of flapping, they unfurl a never-ending sheet by walking slowly backwards, all at the same pace. With each backward step, the area – the value captured by the stakeholder ecosystem – increases. If one person was to go much faster than everyone else – effectively try to increase their share of the whole, they would rip the sheet from others hands, crumpling it, diminishing the area covered and compromising the future rate of expansion. They may end up with a bigger slice, but the overall size and growth rate would be diminished.

This is what happened with the shareholder value revolution. The value available to staff was reduced and redistributed to shareholders. But in the process, many companies cut organisational muscle as well as fat. And once there was nothing left to cut, all that remained was the shell of a business. If you take the idea of customer-centricity to its extreme, giving customers everything they wanted for free, similarly the business would disappear very quickly and customers would no longer get anything.

Reduced prioritisation in the strategic agenda

Customer-centricity, as a mantra, plays well within the customer facing parts of the organisation. It is music to the ears of the CCO, CMO and anyone within the domains of marketing, sales and service. But elsewhere it can sound a bit like ‘my area is the most important.’ Given the CEO has to manage all stakeholder groups, a chief customer or marketing officer demanding the organisation be customer-centric can appear blinkered, simplistic and self-interested. The risk therefore is that demanding customer centricity de-prioritises customer experience in the CEO’s agenda – if we have to be customer-centric, that is too hard, so let’s not bother.

Also think about the impact in other parts of the organisation, especially as customer centricity is supposed to be an organisation-wide commitment. Imagine you are sitting in the accounts receivable team in finance and you have got a customer who hasn’t paid. How does being told you need to be customer centric help you do your job? It doesn’t. In fact, it could impede you, because being customer-centric might be interpreted as allowing them to not pay.

If, on the other hand, you were told that you were to be finance-centric – collect all monies owed as far as possible – but that you should consider the impact of your actions on the customer’s experience and therefore the likelihood of their doing business with us again, the message is more likely to stick. The same logic applies to people working in non-customer-facing areas such as supply chain management, operations and human resources.

So what should replace customer-centricity?

So, if customer-centricity is too vague and immeasurable, simplistic and unachievable, a means rather than an end and not demonstrably the most superior one – what should organisations aspire to instead.

Focusing on the desired end is a starting point – creating value for customers in a way that creates value for the business. And if a theme for how to achieve that is desired, I would suggest using customer curiosity which is something that everyone across the organisation can embrace, promotes thoughtfulness and can easily be translated into action.

I understand that this message may cause affront to a number of people whose career or business depends on promoting customer centricity - people with whom I would agree with probably 99% of the time when talking about the customer experience. So is it worth upsetting people over that 1% difference. Sadly, I think it is. Because I don’t believe we as a profession can, hand on heart, argue that what we have been promoting has had the effect that we would have liked. And if the definition of madness is doing the same thing but expecting different results, what does that say about our sanity?

In my eyes, customer-centricity is simply the firm understanding of the value-drivers for your target audiences. If this is product or price driven? Then these should be identified and treated differently

Hi Dale, I passionately agree that businesses need to aspire to creating superior value for their customers. But why not just say that rather than a vague abstraction which fails on multiple criteria? If you are going to focus on a means of achieving that it needs to be SMART - and centricity doesn't meet that. In my follow up I am outlining why and how customer curiosity can meet that.

I couldn't agree more "... customer-centricity is simply the firm understanding of the value-drivers for your target audiences. If this is product or price driven? Then these should be identified and treated differently." Great insight!

Very good article. I have for a long time been thinking about this from a couple of perspectives, fully supporting your findings:
a) too often the clichè "if you don't know what you want, you won't get it" is true. Companies think that they are doing things in a customer-centric way, but because of several internal obstacles, their actions often support only one or two stakeholder groups. These obstacles include internal politics, wrong kind of goals set to the management and personal attitudes which don't support the changes required.
b) in my experience, being a non-technical person myself, I have far too often seen that organizations are approaching the required actions and changes in a kind of
a "technical angle"; the delivery of as many technical capabilities as possible seems to be their main goal.
So, instead of using digitalization optimally, they are using it as much as technically possible. This leads in many cases to the kinds of "communication overload" situations that you describe.

Why it is so hard to just use common sense and the best practices that have been known for many decades, is beyond my understanding...

Jack, Great observations here and I share many of your concerns regarding the failure to properly deploy "customer" orientated programs whatever they happen to be called.
I get why companies like "customer" centric programs as they are a good PR message, a bucket to put all their customer problems in as well as an employee rallying call. Getting board level accountability for the company's customer performance is difficult due to it's intangible nature but would drive some specific behaviour changes and create a demand for forward looking tangible evidence of success beyond CSat and NPS.

Well said, customer experience is an end and customer centricity is a means. Though customer centricity is vague, immeasurable, as stated, delivering the quality of service customers expect is a means to gain strength today. This needs businesses to focus on a desired end point, and start with the right approach. Delivering accurate resolutions at the first contact gives a great start to a solid business-customer relationship. Thus, businesses should focus on improving this metric. Sharing a short guide on how the choice of right tools helps deliver a better customer experience, right from the start. http://www.kochartech.com/blog/2017/01/18/need-improve-first-contact-res... Hope this adds value.